FHA Announcement

The FHA announced today 2/22/2023, that the annual mortgage insurance premiums has been reduced from 0.85% to 0.55% on the monthly. So the monthly payments would be dropped by 30 basis points of the loan amount.

With such a big drop, it allows buyers to qualify better and could afford such a monthly premium. For example on a $400,000 loan amount the old monthly premium would be $283.33 comparing to $183.33, that is $100 per month cheaper!!!

More than 80% of FHA borrowers are first time homebuyers, with lower down payment requirements. Having FHA loans, allows borrowers with lower fico scores than a regular conventional loan and also allows higher DTI (debt to income ratios) of over 50%. FHA loans are 75% of the low down payment programs with LTV (Loan to Value) of 95% or more.

Financing FHA loans also allows borrowers to get a temporary buy-down program, where the seller could subsidies lowering the interest rate for the first 3 to 1 year depending how much are the sellers willing to credit the buyers. So for example on a 5.625% note rate, borrowers cold get the payment down on the first year to rate as low as 3.625% for one year and 4.625% the second year and then the 3rd year, would pay the note rate of 5.625%.